Crushing regulations are driving small banks to sell out to the megabanks, a consolidation process that appears to be intentional. Publicly-owned banks can help avoid that trend and keep credit flowing in local economies.
At his confirmation hearing in January 2017, Treasury Secretary Stephen Mnuchin said, “regulation is killing community banks.” If the process is not reversed, he warned, we could “end up in a world where we have four big banks in this country.” That would be bad for both jobs and the economy. “I think that we all appreciate the engine of growth is with small and medium-sized businesses,” said Mnuchin. “We’re losing the ability for small and medium-sized banks to make good loans to small and medium-sized businesses in the community, where they understand those credit risks better than anybody else.”
The number of US banks with assets under $100 million dropped from 13,000 in 1995 to under 1,900 in 2014. The regulatory burden imposed by the 2010 Dodd-Frank Act exacerbated this trend, with community banks losing market share at double the rate during the four years after 2010 as in the four years before. But the number had already dropped to only 2,625 in 2010. What happened between 1995 and 2010?
Six weeks after September 11, 2001, the 1,100 page Patriot Act was dropped on congressional legislators, who were required to vote on it the next day. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Bank of North Dakota, banking regulations, community banks, Dodd-Frank, Patriot Act, public banking | 23 Comments »
WEB OF DEBT BLOG 
The Wealth Concentration Engine: Rethinking America’s Financial Plumbing
A Jan. 17 article on Quartz Markets by Catherine Baab reports that JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup and Bank of America returned nearly all of their 2025 profits to shareholders. Goldman Sachs returned $16.78 billion on $17.18 billion in earnings, meaning 97.7% of its earnings went to shareholders. Wells Fargo, Citigroup, JPMorgan, and Bank of America collectively returned tens of billions more. Across the six largest banks, roughly $100 billion flowed to shareholders in a single year.
They are currently paid 3.65% on their reserves (substantially more than the banks pay on their customers’ deposits), simply for holding them in reserve accounts rather than using them to capitalize new loans. Tens of billions of dollars that were once remitted to the Treasury now land on bank balance sheets with no public benefit attached.
We subsidize the banks’ safety, underwrite their liquidity, and reward them for sitting on assets, without requiring them to invest in communities, build public wealth, or serve any public purpose. It all seems pretty outrageous; but as it turns out, the banks are doing what U.S. corporate law requires them to do. If they don’t follow the “shareholder primacy rule,” they could actually be sued by their shareholders.
Continue reading →Filed under: Ellen Brown Articles/Commentary | Tagged: bank buybacks, Bank of North Dakota, community banks, corporate governance, economic inequality, Ellen Brown, financialization, JS, NATIONAL INFRASTRUCTURE BANK, public banking, shareholder primacy, Wall Street extraction | 4 Comments »